The suit alleges that S&P provided deceptive ratings on mortgage securities between 2004-2007 that “greatly” underestimated the mortgage securities risks. They also allege that S&P did this to collect fees from the firms that were pooling the risky home loans into securities. The government is alleging $5 billion dollars in civil penalties.

Attorney General Eric Holder stated that “during this period, nearly every single mortgage-backed CDO that was rated by S&P not only underperformed, but failed… put simply, this alleged conduct is egregious and it goes to the very heart of the recent financial crisis.”

S&P called the lawsuit from the Justice Department “entirely without factual or legal merit.” S&P said that it “deeply regrets that its ratings failed to fully anticipate the rapidly deteriorating conditions in the U.S. mortgage market, but that it relied on the same data as U.S. government officials and other analysts who failed to predict the housing bust.”